Auto components industry seeks government support for COVID-19 crisis

Auto components industry body (ACMA) said that, it is taking a hit of around Rs 1,200 crore per day due to the lockdown owing to coronavirus pandemic. The industry is urged the government to come up with a financial package, including relaxation in borrowing norms, in order to survive the current situation.

Terming the
current situation as unprecedented, the Automotive Component Manufacturers
Association (ACMA) said its member companies despite facing challenging times
are taking all possible steps to safeguard the interests of their respective
workforce.

“The auto
component industry stands by the government in this hour of challenge. However,
with complete stoppage of production in the vehicle industry and scarcity of
working capital, the situation in the component manufacturing units, including
the tier-2s and tier-3s has become quite acute, threatening their survival,”
said Deepak Jain, president, ACMA.

He further said,
“We have requested the government for helping us with immediate relaxation of
borrowing norms and statutory payments, extension of moratorium on payment
of principal and interest of loans for a year, among others.” ACMA is seeking
support for working capital like relaxation of borrowing norms and
statutory payments and easing of NPA recognition norms by extending moratorium
on payment of principal and interest by at least one year.

It further sought
relaxation in fixed electricity charge and in levy of demurrage charges for at
least seven days for import cargo clearance. With a three-week lockdown,
production has come to a standstill in the automotive industry across the
country, Jain said.

Auto component
manufacturers, especially the tier-2 and tier-3, are facing severe hardship on
cash flow front, which if not immediately addressed will lead to insolvency of
several companies, he added.

“There is no
clarity on how the market will pan out in the ensuing months, thus further
eroding the industry’s confidence. It is estimated that the component sector
is facing production loss of Rs 1,000–1,200 crore per day,” Jain said.

He added that
despite the financial crunch, over 100 companies have decided not
to cut payments of employees, including the temporary ones. Jain said ACMA
has created a taskforce which is evaluating the possibility of manufacturing
facemasks, hand sanitisers by its members.

“Several of the component companies have shown keen
interest to manufacture these items. Specifically, for ventilators,
members are evaluating the option to import them through their CSR funds,”
he added.

The auto
component industry contributes 2.3 per cent to country’s GDP, 25 per cent to national manufacturing
GDP, and employs over 50 lakh people. In 2018-19, the turnover of the
industry stood at US $ 57 billion with US $ 15 billion in
exports. PTI